As they say in poker, If you’ve been in the game 30 minutes and don’t know who the patsy is, you’re the patsy.
— Warren Buffett
By now, you may have heard about the insider trading scandal at the two biggest fantasy sports companies. DraftKings employees, based on the bets they saw laid down by their clients, made a killing at competitor site FanDuel.
Let’s get one thing out of the way: This isn’t insider trading, at least as it’s commonly understood. These aren’t trades based on material nonpublic inside information about publicly traded companies. These look to my eyes more akin to one bookie laying off bets on another.
This black eye aside, fantasy sports is becoming a very big business. Family friendly Walt Disney Co. invested $250 million in DraftKings earlier this year; the fantasy sports site then raised another $300 million, led by Twenty-First Century Fox.
There is now a Fantasy Sports Trade Association, and that means lobbying dollars are not very far behind.
Here’s how I look at it. There are two big issues: 1) Is this gambling?, and 2) Is this a sucker’s bet? There is a technical debate about the former question; there is no debate about the latter.
Continues here: Don’t Be the Patsy in Fantasy Sports